Early budget deal may be a milestone for deficits, school aid

Democratic Gov. Tom Wolf and the Republican-controlled Legislature have wrapped up budget legislation a week before Pennsylvania state government’s new fiscal year starts, an about-face after three years of protracted partisan fights over spending. Besides that, the budget perhaps achieves milestones in overcoming deficits and cuts to education aid, while lawmakers were animated by the Florida high school shooting in February.

The bottom line

The $32.7 billion plan holds the line on state taxes, and increases authorized spending by about $700 million through the state’s main bank account, or 2 percent above the current year’s enacted budget of $32 billion.

The spending increase goes primarily to public schools, prisons, social services and pensions.

However, roughly $900 million will be spent outside of the state’s main bank account to underwrite human services costs, and critics say moving the spending off-budget masks the true cost of state operations and the true increase in state spending.

What Wolf got, or not

Wolf, who is seeking a second term in November’s election, floated his fourth and most modest budget proposal in February. He appeared to get most of the spending he had requested, including an extra $40 million to expand high-demand computer and industrial skills training in high schools and colleges.

Republicans still rejected Wolf’s request for a fourth straight year for a severance tax on Marcellus Shale natural gas drilling and Wolf’s request for municipalities to start paying a $25 per-person fee for the state police coverage they receive, a total of $63 mil-

Deficits

Some state officials suggest Pennsylvania state government has turned a corner from the past decade of persistent post-recession deficits. With strong House Republican

resistance to raising taxes over the years, the state government instead has patched over deficits with cuts, belt-tightening, one-time cash sources and a grab-bag of narrow tax or fee increases.

It is possible that the state has turned a corner: It expects revenue growth of around 4 percent in two straight fiscal years, perhaps the strongest two-year period

since before the recession a decade ago.

However, the state is using roughly $1 billion in onetime cash sources to balance the new budget package. In a year, budget makers will be tasked with finding cash again to pick up those recurring costs, as well as any new spending or increasing costs. Even meeting a projection of 4 percent growth is unlikely to cover all of those

costs alone.